Introduction
Introduction Pursuant to the Consultation Conclusions on Proposals to Expand the Paperless Listing Regime published by the HKEX, the HKEX Listing Rules will be amended with effect from 31 December 2023 (“Effective Date”) to reduce printed documents to be submitted and circulated by listed issuers and to encourage use of electronic communications.In particular, it would be mandatory from the Effective Date for listed issuers to disseminate most corporate communications (for example, annual/interim reports, announcements, circulars, notices of general meetings and proxy forms) (“Corporate Communications”) to their shareholders electronically, except as requested in hard copies upon the request of a shareholder (“New Mandatory Requirement”).
For certain “Actionable Corporate Communications” (which means any communication that seeks instructions from the shareholders on how they wish to exercise their rights as shareholders, e.g. rights issue documents, etc. but excluding general meeting notices and proxy forms), they must be delivered in hard copy to the shareholder if no specific electronic contact details of such shareholder have been provided to the listed issuer.
In view of the above, a listed issuer is required to notify their shareholders of the New Mandatory Requirement with details explained as follows.
One-time Notification and Hard Copy Policy
Under the New Mandatory Requirement, a listed issuer shall transition from disseminating Corporate Communications by hard copies to an electronic means in such manner as it chooses and as permitted under its applicable laws and Memorandum and Articles of Association (“Elected Electronic Means”). Subject to the applicable laws and the Memorandum and Articles of Association of the listed issuer, the Elected Electronic M e a n s m a y b e b y p o s t i n g t h e C o r p o r a t e Communications on its website (for general Corporate Communications) and/or sending them by email to the email address provided by each shareholder (for Actionable Corporate Communications).
Nonetheless, before the listed issuer adopts the Elected Electronic Means upon the Effective Date, the listed issuer must send a one-time notification (“Notification”) to each of its shareholders, in hard copy form or (in respect of any shareholder which has already previously agreed to be notified electronically) by electronic means, to:
inform them of the new arrangement of the listed issuer in using the Elected Electronic Means to disseminate Corporate Communications;
with reference to the Elected Electronic Means, solicit the electronic contact details of the shareholders (such as email addresses) (in particular for future dissemination of Actionable Corporate Communications); and
inform them of the arrangements for shareholders to make a request to receive hard copies of the Corporate Communications (“Hard Copy Policy”).
At the same time, under the New Mandatory Requirement, the listed issuer must disclose the content of the Notification (and any revisions of the arrangements thereunder, on an ongoing basis), including without limitation the Hard Copy Policy, on its website (e.g. in the investor relations section)
Deemed Consent of Shareholders
The HKEX Listing Rules allow the listed issuer to rely on implied/deemed consent of the shareholders in receiving the Corporate Communications via the Elected Electronic Means (but subject to applicable laws including those of its place of incorporation). For example, the listed issuer may do so by informing the shareholders, in the Notification, that by providing their electronic contacts, or if the listed issuer has not received the written objection from the shareholder within a certain period of time after the Notification, consent of the shareholder shall be deemed as given.
Practical Takeaways
In essence, it would be mandatory from the Effective Date for listed issuers to disseminate most corporate communications (for example, annual/interim reports, announcements, circulars, notices of general meetings and proxy forms) to their shareholders electronically, except as requested in hard copies upon the request of a shareholder (“New Mandatory Requirement”).
The listed issuer should assess and ascertain whether their constitutional documents (such as Memorandum and Articles of Association) contain any provision that may prohibit them from disseminating corporate communications to shareholders electronically in accordance with the New Mandatory Requirement. From the perspective of the HKEX Listing Rules, listed issuers will only be required to amend their constitutional documents if their constitutional documents contain any restriction to that effect (e.g. any provision that mandates hardcopy dissemination as the only means of dissemination of Corporate Communications).
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